An Urgent Problem

Mounting pension debt is threatening our cities and states

Millions of workers across the country depend on public pension plans for their retirement. But for years,  state and local politicians have failed to responsibly manage pension systems, and governments now owe public workers at least $1.9 trillion for benefits they have already earned. In many places, it’s not too late to fix the problem, but if politicians continue to kick the can down the road, the situation could escalate into a full-scale crisis.

What Are the Causes?

During the bull market of the 1990s, politicians awarded large benefit enhancements that some claimed could be paid for at no additional cost to taxpayers. By the early 2000s, however, economic growth began to slow and investment returns fell short of the pension plans’ assumptions. Rather than take immediate action to address the shortfall, governments largely ignored the issue.

What Is the Impact?

Put simply, the rising pension debt is causing serious challenges for workers, taxpayers, and the governments that serve them. Many public workers have gone without a raise and have experienced retirement and healthcare benefit cuts, while communities have been forced to make tough choices between cutting programs and raising taxes.

How Do We Fix It?

Fair and sustainable solutions are within reach. Governments must adopt financially responsible plans to pay down the accrued pension debt, and, going forward, must make payments on time and in full. In addition, they must adopt prudent investment policies that protect workers and taxpayers.